Tuesday, December 4, 2012

India & Indian Market going on too single hand (Monopoly)!!!

Monopoly an economic term can be know for management student but common man never knows about it and impact of such extreme certainty of economy. Monopoly were a company in a sector controls majority section of the customer r market. Monopoly are too dangerous on long run of economy. After 1991 liberalism, in India there was stuff competition between Indian big companies and foreign companies. All big Indian companies has became multi national corporate company. Mutual co-operation and sharing between big companies led to monopoly on larger scale putting an end to market competition.The article can be eye opener on monopoly and corporate companies nexus.

How monopoly takes place?

Huge barrier for big companies to occupy majority market was always state owned companies.To destabilize such state companies and local company mighty big companies comes with low price commodity, huge endorsement, technology, investment etc. State and local companies can never provide customer with low price product as equal to big companies. so  automatically such companies lose market share,which ultimately favors big companies in market. Big companies can keep there price low for long time until they occupy major share of market since they have huge investment to maintain it.

Aftermath effect of Monopoly!

When state and local companies lose market share ultimately leading to privatization of state owned companies. After occupying majority market only either two things can happen in a market 1. nexus between all private companies or 2. elimination of medium and small private companies by big companies. It will affect on both ends consumer and producer. Only ultimate gainers of such monopoly would be intermediates like traders,capitalist etc. They would consume raw material, labor at low cost affecting producers. They can increase product cost multiple level,since no alternative way to get product at low price affecting consumers. Such monopoly or path to monopoly can affect fare competition between companies.

Fare example of Indian monopoly:

After 1991liberalism, Coke & Pepsi entered India with low price of rs 3 but after occupying market to large extent product cost went up to rs 15. Both company occupy the market to extent of 70%.
Cadbury has a market share of over 70% in chocolate market.
Nestle a market share of 60% in energy drink sectors.
Lays with a market share of 50% in snacks & processed food.
Likewise KFC,MC Donald,dominoes,pizza hut, ITC, Cigarettes, beverage etc in all sectors a company occupying majority of market making it to determine the value of the product in the market.

This are small example were it affect both producer and consumer directly but monopoly large scale industries can affect indirectly affect producer & consumer and leave a huge impact on economy.

Airtel & Vodafone occupying over 50% of market.
Nokia 60% of basic phone market and samsnug around 70% of smart phone market.
Like wise in banking, heavy industries, automobiles, power generation etc all are moving towards monopoly. Only barrier for them would be state owned in this sector, so government and big companies in a complete nexus destabilizing state owned companies. When state owned go into hands of private company then nation will know impact of  monopoly. Ex: BSNL state owned telecom company is at edge of privatization, 17 nationalized bank's slowly becoming private etc.

There thousands of sectors were market moving towards private individual monopoly. Government was closing eyes to such monopoly and encouraging such activity on privatization of state owned companies. Now government trying for monopoly in retail sector to with introducing FDI in retail, which will lead to Walmart, tesco etc occupying majority market eliminating local retailers. Most sad part of it was even in defense sector private players are stepping in, all recent defense purchase tenders were given to all private companies. Its not matter of few penny money but its a billion dollar deals and prime importance national security.  

Something can be done by US!!!!

Always opt for product alternative to monopoly company product , which keeps competition between companies alive bring the product price low. Always fight to keep state owned companies alive and privatization of our own state companies.                   

12 comments:

  1. Great post. Thanks for the helpful cheat sheets. Now maybe I’ll get my head wrapped around this stuff. Probably not, but it’s a goal. Gotta have them goals.

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